Oil climbed further above $52 a barrel on Friday, supported by a drop in U.S. fuel inventories, though gains were kept in check by ample crude supplies even as OPEC plans to cut output.
Brent crude reached a 2016 high near $54 on Monday, underpinned by OPEC’s Sept. 28 deal to reduce oil production, before weakening on rising U.S. crude stocks and as the Organization of the Petroleum Exporting Countries’ own numbers showed output is still rising. [OPEC/M]
Global benchmark Brent LCOc1 was up 32 cents at $52.35 at 1149 GMT. U.S. crude CLc1 gained 53 cents to $50.97.
“It would appear that the bulls on the oil market do not give up so quickly,” said Commerzbank analyst Carsten Fritsch. “Despite an unexpectedly sharp rise in U.S. crude oil stocks, oil prices are making significant gains.”
U.S. crude inventories overall USOILC=ECI rose by 4.9 million barrels, the first increase in six weeks, the government’s Energy Information Administration reported on Thursday.
But stocks at the Cushing delivery hub for U.S. crude futures declined and U.S. inventories of distillates, which include diesel and heating oil, fell by 3.7 million barrels. Gasoline stocks dropped by 1.9 million barrels. [EIA/S]
“The end result was slightly positive,” Stephen Brennock, of broker PVM, said in a report, referring to the EIA figures. The rise in crude stocks was “more than offset” by lower fuel inventories, he said.
U.S. crude’s structure gained support from the extended outage of a pipeline capable of delivering 450,000 barrels per day of crude into Cushing, traders said. nL1N1CJ2A8.
OPEC’s plan is to cut its supply to between 32.5 million barrels per day (bpd) and 33 million bpd to help to balance supply and demand and revive prices that remain less than half of the levels reached in mid-2014.
However, a lack of much detail in the initial agreement, such as how much each of the 14 members can pump and the scale of any contributions from non-OPEC countries such as Russia, has left analysts skeptical.
“We are doubtful that OPEC’s efforts, even if successful in achieving a targeted 32.5 million bpd in collective output, will prove sufficient to materially alter the global oil balance and deliver a substantial reduction in oil inventories,” BNP Paribas said in a report.
OPEC’s own monthly report on Wednesday put production at 33.39 million bpd in September.